WASHINGTON Dec 20 (Reuters) - Now that House Speaker John
Boehner's "Plan B" for addressing the "fiscal cliff" has crashed
and burned, the top U.S. Republican appears to have two
remaining options - wash his hands of the entire matter or
negotiate a compromise with Democrats that could abandon scores
of his fellow Republicans.

The Republican rank and file and Democrats may face an
equally stark choice: work together for a change, or plunge
together off the cliff.

Boehner tried to ram a "fallback" plan through the House on
Thursday - a relatively tiny tax increase on millionaires and
billionaires - and failed. His rambunctious Republicans, who see
opposition to all tax hikes as a matter of bedrock principle and
of political survival, refused to go along.

President Barack Obama and his Democrats who control the
Senate take the opposite view - tax hikes on the wealthy are a
condition for their support of a fiscal cliff bill. If there is
to be a resolution it will largely depend on an improbable
scenario - Democrats in the House teaming up with less militant
Republicans to back away from the fiscal cliff.

Compromise has been out of style in recent years, and many
think it could require some prodding from the markets.

"At this point, I only see one route to avoiding the cliff,
a replay of the TARP debacle in 2008," said George Washington
University's Sarah Binder, an expert on Congress. In September
2008, the House defeated the bank bailout bill and the market
collapsed, prompting a terrified lawmakers to reconsider and
pass it.

"In this case, a harsh market and public reaction would be
needed to force the hand of the speaker to negotiate a deal that
can pass with Democratic votes," she said.

"If the GOP takes a beating in the headlines and the market
tanks, I suspect a good number of rank-and-file GOP will demand
that the speaker go back to the table. But absent whiplash from
the markets and voters, I suspect it's over the cliff we go."

For the time being - or at least the 11 days until the
automatic tax hikes and spending cuts are triggered - the House
is in disarray and no deal to avert the fiscal cliff is in
sight.

While the House in recess for a Christmas break that is
likely to last at least until Dec. 27, Boehner must decide
whether to move any further in Obama's direction and agree to
tax increases much higher than his own proposal that so angered
his fellow Republicans on Thursday.

The Ohio Republican also might have to settle for fewer
long-term spending cuts than he had hoped for.

WALK ON BY

Boehner's only other apparent option - one that he hinted at
late on Thursday following the collapse of his bill - would be
to walk away and leave the problem on Democrats' doorstep.

"Now it is up to the president to work with Senator Reid on
legislation to avert the fiscal cliff," Boehner said in a
statement referring to Senate Majority Leader Harry Reid.

But in a closed-door session before that statement,
Republican lawmakers said Boehner told them that he would at
least try to work out something with Obama.

Either way, Boehner faces the possibility of having to
battle not only Democrats for the next two years, but also his
own membership on major bills.

"We have people (Republican lawmakers) who felt like they
had to stand on the principle ... they couldn't vote for
anything (that raised any taxes). I don't quite understand it,"
lamented Representative Buck McKeon, the powerful chairman of
the House Armed Services Committee, who oversaw passage of a
$633 billion defense spending bill for 2013.

"If you don't have the votes, you can't move forward,"
McKeon said of the Plan B fiscal cliff bill.

Representative Steven LaTourette, a moderate Republican who
is retiring at year's end, told reporters that Thursday's
legislative defeat - and public relations failure - will not
stop Boehner from being re-elected House Speaker on Jan. 3.
"Name one member who opposes him," LaTourette challenged
reporters.

Firing Boehner, LaTourette said, would be "like saying the
superintendent of the insane asylum should be discharged because
he couldn't control the crazy people."

Nonetheless, two years into his stint as Speaker, Boehner
still has not found the right formula for corralling his
Republican majority, especially the Tea Party conservatives
whose victories in 2010 helped Republicans wrest control of the
House. However, he has taken steps in recent weeks to punish a
handful of uncooperative Republicans.

Since unveiling his plan on Tuesday, several conservative
groups, including the Heritage Foundation, waged a spirited
effort to kill the measure.

Those groups, LaTourette said, had been "making their phone
calls, and they're bombing people" with pressure to vote against
the bill. That, he added, "makes people nervous" about primary
election challengers being recruited in 2014 by outside groups
to defeat Republican lawmakers who vote for any tax increase.

"I doubt his speakership is in trouble," said American
Enterprise Institute scholar Norm Ornstein, "The big question is
whether, and when, he is willing to bring up a bill that will
require more Democrats than Republicans to pass."
(Reporting By Richard Cowan. Editing by Fred Barbash)